Well, that was a short letup. The new year is back to its ugly ways, after the S&P and Dow managed to end their three-session skid yesterday. This morning, global markets are on a slide.

Currency traders are buying safety plays like the dollar and yen, and they are “worried that the losses at the start of the year foreshadow a deeper correction in the days, weeks and maybe even months to come,” says BK Asset Management’s Kathy Lien in a note.

“China is in trouble, U.S. data has been disappointing, Japan refuses to increase stimulus and oil prices continue to fall, but everyone’s greatest fear is that stocks have finally peaked for all of the reasons mentioned above,” Lien writes.

So what’s an investor to do? You might hear calls to “go to cash to avoid the crash,” along with advice to short oil, fade small caps
IWM, -1.13%
or buy the FANGs, notes Bob Seawright over at Above the Market.

But you should “ignore all that as so much noise,” Seawright says. His advice: Just stay diversified and focused on investing for the long term. More from his exhortation to investors, “a New Year’s resolution worth keeping,” in the call of the day.

But before you resolve to do as Seawright suggests, look at today’s chart, which shows how the almighty dollar may have sketched a promising pattern.

Key market gauges

It’s mostly a sea of red in the early going, but the green exceptions include those safety plays, like the yen and gold
US:GCG6
. Plus, Chinese stocks
SHCOMP, +0.29%
closed higher, taking a break from playing troublemaker.

The quote

Getty Images

South Korean officials on Wednesday point at seismic waves from North Korea.

“Thanks to the fact that our country is a nuclear weapons state, I can study at the university without any worries. If we didn’t have powerful nuclear weapons, we would already have been turned into the slaves of the U.S.” — 22-year-old North Korean college student Ri Sol Yong, gives the AP her obligatory enthusiastic reaction to the H-bomb news.

The chart

Chart lovers have been wondering if a key dollar index
DXY, -0.20%
has traced out a cup-with-handle pattern. The above chart from TradingView.com shows that formation, which often is followed by a breakout to a new high. Or — as skeptics of technical analysis like to point out — you get a plunge, or just sideways action.

Those looking for a drop include Market Anthropology’s Erik Swarts. He writes that he remains convinced the buck is “poised to decline” from a “relative performance extreme,” which should give a helping hand to non-U.S. markets.

BK Asset Management’s Lien has sounded a bit skittish about the dollar ahead of today’s flurry of economic reports. “Unfortunately, given the recent track record of U.S. data and market expectations, the odds are skewed towards softer numbers and if that is true, the dollar could extend its losses versus the yen and give up its gains against other major currencies,” she writes.

The economy

This day is delivering plenty of economic news. Employers added 257,000 jobs in December, said ADP’s private-sector jobs report, the appetizer for Friday’s nonfarm payrolls. A separate release said the nation’s trade deficit sank 5% in November. Factory orders and ISM’s non-manufacturing index are due to hit at 10 a.m. Eastern Time.

The stat

WSJ

28% — That’s the portion of U.S. car sales that now comes from those born between 1977 and 1994. That’s according to a Wall Street Journal story citing data from J.D. Power, which views that age group as Gen Y or millennials. It’s a big increase on 2010, when that group provided only 17% of sales. Maybe the auto industry can weather the challenges posed by millennials and self-driving cars after all.

The call

Pragmatic Capitalism, Above the Market

Humans “don’t generally make forecasts very well,” and Wall Street’s 2015 predictions proved “simply dreadful,” writes Seawright, the chief investment and information officer for Madison Avenue Securities. The CEO of Bear Stearns once said his shop’s chief economist was “an entertainer,” he notes.

Experts have sometimes made pretty embarrassing predictions, he points out: Marconi saying wireless would make war impossible, as well as Bill Gates basically predicting no spam email by 2006.

“Even when we recognize the fallacy of thinking in terms of single, linear causes (Fed policy, valuations, etc.), the markets are too complex and too adaptive to be readily predicted,” Seawright says.

Just as a critic in the movie “Amadeus” said Mozart’s music contained too many notes, there are “too many variables to predict market behavior with any degree of detail, consistency or competence. ... Unless you’re Seth Klarman or somebody like him (none of whom is accepting capital from the likes of us), your crystal ball almost certainly does not work any better than anyone else’s,” he says.

Given the problem with predictions, portfolios should be diversified, Seawright says. He notes 25% of U.S. stocks fell 75% or more in 2008, but “only four of over 6,600 open-ended mutual funds” lost that much. “Next, make sure your time horizon is long enough. If you don’t have at least a five-year time frame before using the money, stocks are almost surely a bad idea for you,” he says, offering the PragCap chart above.

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